The Association of Taxation Technicians (ATT) is urging the Government to consider expanding the eligibility criteria for tax relief on contributions to flood defence projects.
At present businesses that contribute to approved flood and coastal defence projects can deduct their contribution from the profits of the business for tax purposes, reducing their Income Tax or Corporation Tax bill1. ATT is suggesting the relief be expanded to enable individual taxpayers to make such contributions on a similarly tax-efficient basis. This might be done for example in a similar manner to Gift Aid or Payroll Giving.
The call to expand the scope of the relief comes as Storm Desmond has led to severe flooding in parts of Britain.
Paul Hill, Chairman of ATT’s Technical Steering Group said:
“As we can see from Storm Desmond, flooding does not just impact businesses, it can devastate the lives of people living in the areas concerned.
“By extending the scope of flood defence tax relief to contributions from individuals regardless of their particular source of income, more communities could benefit from flood defence projects and do so more quickly.
“That in turn could help the economy as a whole at the same time as reducing the type of misery that is being suffered by people whose homes have been flooded this month.
“At the beginning of the year, the ATT drew attention2 to the lack of logic in only granting tax relief on a contribution to an approved flood defence project if it was made by a business. We see no reason why less value should be attributed to contributions from private individuals than to those from businesses. On that basis, tax relief should be equally available on all contributions regardless of the source.
“The discussion of what more might be done to avoid repetition of the current widespread flood damage to homes needs to include consideration of the effectiveness and relevance of the tax provisions that were introduced in response to the winter flooding of 2013-2014.
“Anything that can be done to accelerate Environment Agency projects and make the available government funding go further has to be worth considering. The availability of tax relief – however structured - on individual contributors to an approved flood defence project needs to be included as part of that debate.”
Notes for editors
- The current provisions governing tax relief on contributions to flood defence projects that are approved and part funded by the Environment Agency/DEFRA were announced in the 2014 Autumn Statement and included in Schedule 5 of Finance Act 2015. (For detail, see pages 173 to 179 of http://www.legislation.gov.uk/ukpga/2015/11/pdfs/ukpga_20150011_en.pdf ) The imminent General Election meant that there was minimal time for debating any of the Finance Bill provisions and there was therefore no consideration in Parliament of the new flood defence tax relief provisions. The pre-election Finance Bill was published on 24 March 2015 and received Royal Assent on 30 March 2015.
- ATT’s comments on the consultation draft of the provisions (published on 10 December 2014) were submitted to HMRC on 30 January 2015 and can be seen at: http://www.att.org.uk/technical/submissions/draft-fb15-clauses-flood-defence-relief-att-comments